Ciena posted a strong fiscal fourth quarter this morning. Revenues of $692M and non-GAAP earnings per share of $0.42 were both solidly ahead of expectations. However, guidance for the usually seasonally light fiscal Q1 was significantly lighter than expected, which will likely cast a shadow on the market response. Here are their numbers in some context:
| $ in millions | FQ4/14 | FQ1/15 | FQ2/15 | FQ3/15 | FQ4/15 | FQ1/16 (guidance) |
|---|---|---|---|---|---|---|
| -Converged Packet-Optical | 383.3 | 336.6 | 432.9 | 408.0 | 484.3 | |
| -Packet Networking | 56.4 | 55.0 | 53.3 | 57.2 | 63.8 | |
| -Optical Transport | 26.5 | 22.3 | 16.5 | 17.5 | 16.7 | |
| -Software and Services | 124.8 | 115.3 | 118.9 | 120.2 | 127.2 | |
| Revenue | 591.0 | 529.2 | 621.6 | 602.9 | 692.0 | 555-590 |
| Adj. OPEX | 203.7 | 197.3 | 207.9 | 202.1 | 220.5 | ~220 |
| Adj. GM% | 37.9% | 44.1% | 44.4% | 45.3% | 44.9% | ~44% |
| Adj. EPS | -0.08 | 0.12 | 0.35 | 0.37 | 0.42 |
Revenues included a substantial $84.4M contribution on the packet-optical line from the company’s acquisition of Cyan, which closed a few days after the quarter started. That number is a bit puzzling given that Cyan’s revenues back in Q1 were not even half that. I suspect we’ll hear about some shift in accounting that accounts for it, but if so it might suggest that fiscal Q4 revenues were actually lighter than expected. EDIT: the big Cyan number came from a high priority Z-series sale to a US service provider, and the usual number will be in the $30M/quarter range. The Blue Planet SDN/NFV lineup is not expected to be a big revenue driver in 2016, which the company says should be seen as a foundational year for the technology in advance of future growth.
Meanwhile, analysts had been looking for revenues in the $630M range for fiscal Q1 project and didn’t get it. As the press release didn’t elaborate, the market will be listening closely to the call to hear what’s going on. Full year 2016 revenue guidance is for growth in the range of 8-9%, which was a good number but was also lighter than anticipated. EDIT: The bottom line seems to be that the ramp up of new products will be slower than the market would like. Ciena has also set a new operating margin target of 15%, to be reached over the next few years.
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Categories: Financials · Software · Telecom Equipment
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Core business ex-Cyan expected to see 3% rev. growth for 2016. NOT good.